Why The Feds Should Tread Lightly On Hydrogen Regulation

March 13, 2023

(…) The U.S. Treasury Department is in the process of developing guidance related to the so-called 45V tax credit pertaining to hydrogen that was a part of the Inflation Reduction Act (IRA) passed by congress and signed into law by President Joe Biden last summer. Such guidance can either be applied in a flexible manner that will encourage big investments into projects to produce and distribute hydrogen by a variety of means, or it can be applied in a narrow and restrictive way that will inevitably diminish the fuel’s prospects and defy congressional intent.

(…) Nearly all hydrogen proponents favor a more expansive approach by Treasury based on the clear language contained in the IRA. The law itself provides for the tax credit to be offered to various projects based on a sliding scale dependent upon the project’s carbon intensity. The lower the intensity of carbon emissions, the higher the level of credit that will be available to investors. This approach accounts for carbon reduction goals associated with the production of hydrogen and was the clear intent of the law’s authors.

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